This is a story about tending to the tallest tree in venture capital. But let’s start with something smaller—much smaller.
In Japanese gardening, there are few challenges that demand more thoughtful attention than caring for the bonsai tree. Too much water, it rots. Too little water, it wilts. Prune a bonsai tree haphazardly, it loses its shape for good. Caring for these tiny trees is for those who believe in intention, precision, and that minuscule things matter.
Roelof Botha, Sequoia Capital’s managing partner since 2022, thinks about intention in a way that seemingly applies to almost everything, even his brown leather sneakers. Over Zoom on a recent afternoon, Botha walked up to a conference room camera and stuck out a foot to show me that they follow through in his jacket. (The last time we met, he’d really liked my yellow Nike Dunks, so this wasn’t our first time discussing footwear.) "Do you like fashion?" I asked. He briefly looked away in thought, and reframed the question.
"I like being deliberate," said Botha. "If you’re going to do something, you should do it intentionally."
This is, of course, a philosophy that extends far beyond footwear. A member of the PayPal Mafia that shaped the payments company’s early years, Botha took charge as Sequoia’s "steward" after about 20 years at the legendary VC firm. Over the summer, Fortune’s Michal Lev-Ram profiled Botha, but a lot’s changed since then, in venture and in the world. (The markets, of course, have rapidly changed since this interview on Feb. 19.)
"There's a renewed sense of optimism," Botha tells me. "The stock market has obviously had a good run in the last six months, and that has a knock-on effect in private markets…The exuberance, the renewed strength of the public market has a ripple effect back into late-stage private investing. If you look at historical multiples right now, we’re at about the 85th percentile of historical valuation multiple levels. So, roughly you have to go back to the peaks of 2022, 2008, and 1999 to be at a higher relative valuation multiple level than we are right now."
The natural question: Will growth continue or will there be a correction? Meanwhile, VC itself has been in the midst of its own reshuffling. Today, there are about 3,400 VC firms in the U.S., according to the National Venture Capital Association. This is a startling increase even compared to the end of 2018, when the NVCA estimated there were "approximately 1,000 venture firms." Starved for exits after the helium-balloon-ZIRP era, the industry is in the midst of a painful adjustment.
"The talking point in the industry in 2021, 2022 was: 'Oh, there are going to be many more unicorns and decacorns than there ever were before,’" said Botha. "That’s actually not true. An analysis we ran about three months ago showed that, for the last 20 years, the number of actual billion-dollar exits, IPOs, or acquisitions, has basically remained constant at roughly 20 a year."
Botha gave me his own take on the Great Venture Capital Bifurcation—the process by which VC firms are either going small and "back to basics" or becoming giant asset managers. Where does Sequoia fall in this paradigm? "We play a different game," said Botha.
To this end, Botha references the Sequoia Capital Fund, the firm’s open-ended permanent structure that’s a step away from the traditional ten-year VC cycle.
"We’re able to be long-term shareholders of winners much longer," he said. "This fund structure enables us to fuel our underlying funds without the need to raise more money. And, by the way, we've been a net source of liquidity for our LPs for the last 20 years. Most other firms keep on growing their asset base. They keep on sucking more money out of the system because they need to fuel their ongoing investments, and the returns aren't good enough for them to be able to distribute more than their investment. We're in the opposite situation. We have distributed far more than we've pulled from our LPs."
In short, Sequoia is uncategorizable, he says. To be fair, they are on some level. I’m not seeing Sequoia make a bid to go public any time soon (or ever) and to say they’re playing a "collect it all" game seems just wrong. At the same time, Sequoia is huge, massive in its influence and capital—though its identity remains tied to returns-focused excellence. Sequoia is currently among Silicon Valley’s most active VCs across multiple stages—this week, the firm led a $190 million round in Peregrine Technologies and its most recently disclosed early investment was a pre-seed round in Lemni, an AI agent startup. The firm is a backer of more than half of the "Private Magnificent Seven"—SpaceX, Stripe, OpenAI, Scale AI, Rippling, Fanatics, and Databricks.
It’s hard to tell if Sequoia’s unclassifiable-ness will be a problem over time. It’s also easy to become a victim of your own success if you’re not careful, and that’s part of what makes Botha’s job interesting—he has both redwood and bonsai-sized concerns to manage. (I didn't get a chance to ask Roelof about his knowledge of bonsai trees, but I suspect he'd appreciate the intentionality they require.) Though he’s not in it alone, he’s clear. When Botha talks about the team dynamics needed to keep Sequoia charging ahead, his focus isn’t on 'I am competitive' but on 'we are competitive.' Botha’s love of rugby is well-documented, and his leadership philosophy is inextricably linked to the fact that, in his heart of hearts, he’s a rugby captain.
"In rugby, you care about the score," said Botha. "One of the things that really surprised me about American sports—in a basketball game, they praise athletes for the number of rebounds or points in the game, even if the team loses. I thought 'all that matters is if he wins.' In rugby, no one cares who scores the tries. It’s the team’s success that matters. That’s the kind of ethos we have as players. What is our shared success? So, you empower people."
In this vein, Botha is opposed to micromanaging, seemingly as a matter of principle.
"When you work with and hire exceptional people, why would you want to micromanage them? Andrew [Reed] has fantastic ideas of his own," he said. "I want to give him as much free rein as possible so he can do things where I go: 'Wow, that was brilliant. I didn't have that idea.' That’s in the spirit of teamwork. If you’re insecure, you’re fearful when others do interesting things, because it implies you know you weren't all-knowing—but none of us are. When you get comfortable with that, you can empower a team, because our goal is shared success."
Sequoias—the towering redwoods for which Don Valentine named Sequoia in 1972—are demanding on a grander scale. They can grow quickly, with the right conditions: moderate temperatures, full sun, deep soil. They’re ravenous, vulnerable, but can live for thousands of years.
The thing about caring for a giant is that you can’t smother it. You can’t force it to grow faster, and you have to tend it carefully. You have to do lots of small things and large things, and know the limits of what you can control.
You have to stand there, under the tallest tree, and do precisely what is necessary—nothing more, nothing less.
Read the full Q&A with Botha here.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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